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Reducing complexity - a case study
| 8% savings on annual spend | Ever the cry from the manufacturing locations, complexity reduction might involve cutting the number of SKUs on-site or initiatives to reduce blend cycle time or the number of process steps. Understanding the chemistry of the additives purchased can be key to this reduction in complexity. | |
| Testing programme paid for within months | Our client had multiple blending locations as a result of several mergers and acquisitions. The plants were blending a mixture of formulations developed in the plant laboratories, at the R&D centres and "specially developed" formulations from some of the additive package suppliers (the addcos) involving the addcos' own boosters. This history left the plants with multiple drums of slow-moving additives that had the same function and were often suspected of being the same thing. | |
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Cost & operational savings due to consolidated deliveries |
The first questions were directed to marketing:
Then to the development chemists:
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Fewer deliveries leading to reduced HSE risk at plants
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Responses ranged from "as long as the infrared spectrum of the product is the same", to "we require side by side testing on finished formulations and on the two additives to demonstrate that they are equivalent."
These allowed us to build a test matrix with the development chemists and to prioritise the testing programme based on spend, working capital reduction and the complexity of the testing matrix. "Quick wins" were identified and tested at the beginning. Savings of around 8% on total spend were identified, which paid for the testing programme in a matter of months.
Other gains included enabling procurement to consolidate volumes, resulting in fewer deliveries, less clutter in the warehouse and less re-qualification testing of life-expired additives. |
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